US 10-year note manage climbed to the vicinity of the 1.65% level
Oil prices rose on Tuesday despite COVID-19 flare-ups in India and a build in US crude stocks. Instead, as investors focused on OPEC+’s bullish forecasts of a strong global recovery this year. Citing the continued recovery in the global economy, the alliance agreed to stick to its previous production adjustment decision. As a result, Brent crude surged above $66 though was slightly off highs by the end of the day.
Today, the futures struggle to extend gains in part due to a stronger dollar. The USD index extends the recovery, posting gains for the third consecutive session on Wednesday amidst the rebound in US yields. Yields of the US 10-year note manage climbed to the vicinity of the 1.65% level ahead of the outcome of the Federal Reserve decision due later today.
Overnight, the American Petroleum Institute announced its estimate of a rise of 4.3 million barrels in crude oil inventories. Now, traders await the official report from the EIA. If the data confirms a bearish figure, Brent crude could see some intraday losses. Furthermore, the greenback could stage a widespread rally if the Fed delivers a more hawkish message amid rising inflation and solid economic recovery. In this scenario, oil prices may stage a reversal to see decent losses in the short term.
From the technical point of view, Brent crude needs to make a decisive break above the $66 figure in order to extend a bounce from below the 20-DMA that was briefly derailed earlier in the week. Otherwise, another retreat could be expected. For the time being, the short-term technical picture looks neutral-to-positive, with the futures lacking upside momentum to see a more decisive ascent towards last week’s highs around the $68 figure. On the downside, the immediate support now arrives at $65.50, followed by $65.